COVID-19 Support Options Available for Your Business

As at 31st March 2020

We have compiled a comprehensive list of support available to Social Entrepreneurs, Not-for-Profits and SMEs in Australia.

JobKeeper payment

If your business has been significantly impacted by the Coronavirus you will be able to access a wages subsidy to continue paying your employees. Under the JobKeeper program, you will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. This assistance will help you keep staff and will help you restart when the crisis is over.

Eligibility

Employers (including not-for-profits) will be eligible for the subsidy if, at the time of applying: their business has an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or

their business has an annual turnover of $1 billion or more (for income tax purposes) and they

estimate their turnover has fallen or will likely fall by 50 per cent or more; and their business is not subject to the Major Bank Levy.

Self-employed individuals will be eligible to receive the JobKeeper Payment where they meet the relevant

For charities registered with the Australian Charities and Not-for-profits Commission (ACNC), they will be eligible for the subsidy if they estimate their GST turnover has fallen or will likely fall by 15 per cent or more relative to a comparable period.

ATO Relief – “Boosting Cash Flow” and PAYGW Refunds

Legislation has passed to provide temporary cash flow support to small and medium businesses and not-for-profit organisations that:

employ staff between 1 January 2020 and 31 October 2020

have a turnover of less than $50 million

have been affected by the economic downturn associated with COVID-19 (novel coronavirus).

Eligible businesses and not-for-profit (NFP) organisations will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

100% of PAYG withheld between March 2020 and June 2020 (minimum of $10,000 and maximum of $50,000) will be credited to a maximum of $50,000 for the six month period.

An additional payment for June — September 2020 period, equivalent to the to the total PAYG withheld for March to June 2020, will provide a total refund of up to $100,000 per entity.

To access the cash flow boost, you must lodge your activity statement for PAYGW.

PAYGW credits will apply on a per entity, ABN basis. Therefore, if you have two entities conducting business in your group structure each entity may be eligible for PAYGW BAS credits.

For more information, click here for the ATO details, and here for the Treasury Fact Sheet.

Business Support Fund (Vic Only)

The Victorian Government has launched the $500 million Business Support Fund to help small businesses survive the impacts of the coronavirus (COVID-19) pandemic and keep people in work.

Funding of $10,000 per small business is available and will be allocated through a grant process. To be eligible they must:

If you are still waiting in your state or territory for the regulations to be released, click here for some tips / potential traps to help you to identify issues and opportunities around your businesses lease.

Supporting our Creative State (Victoria Only)

A $16.8 million Victorian Government funding package will provide immediate support to Victorian creative organisations and individuals to sustain employment, develop new works and provide opportunities for creative community participation, in the face of the global coronavirus pandemic.

This includes the Sustaining Creative Workers initiative which seeks to support the continued work of Victoria’s independent creative practitioners who have been negatively impacted by coronavirus (COVID-19).

Applications will be accepted for requests:

Up to $5,000 for individuals, sole traders and freelancers

Up to $10,000 for collectives, micro-organisations and businesses*

Up to $2,500 in additional access funding for applications from Deaf and Disabled creatives, artists, arts workers and disability-led organisations/businesses

* Micro organisations/businesses are those that employ less than 5 Full Time Equivalent staff.

Bank Care Package

The Australian Banking Association (ABA) has announced a relief package that includes a deferral of principal and interest repayments for all term loans and retail loans for six months for small business customers with less than $3 million in total debt owed to credit providers.

At the end of the deferral period, businesses will not be required to pay the deferred interest in a lump sum. Either the term of the loan will be extended, or the level of loan repayments will be increased. The package applies to all ABA member banks who agree to participate (listed below). Funders outside of the (ABA) who are providing support are also listed below:

ABA Members

Non ABA Members

ANZ

Commonwealth Bank of Australia

Macquarie Bank

National Australia Bank

Westpac

Bank of Melbourne

Suncorp Bank

ING

Bankwest

ME Bank

Judo Bank

Coronavirus SME Guarantee Scheme

The Government will provide eligible lenders with a 50 per cent guarantee for new loans with the following terms:

SMEs, including sole traders, with a turnover of up to $50 million.

Maximum total size of loans of $250,000 per borrower (effectively a guarantee of $125,000)

Loans will be up to three years, with an initial six month repayment holiday.

These conditions apply only to new loans, not refinanced loans.

Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

The Scheme will be made available by participating lenders until 30 September 2020.

Western Australia

Businesses paying payroll tax, with a payroll between $1m and $4m will receive a one-off grant of $17,500.

In addition, the increase of the payroll tax threshold to $1m will be fast-tracked to 1 July 2020, six months before the originally planned date. This means smaller businesses will potentially be able to fall out of the payroll tax regime sooner than before.

Small and medium-sized businesses, who pay $7.5m or less in Australian taxable wages and have been affected by COVID-19, can apply for a deferral of their 2019/20 payroll tax payment until 21 July 2020.

South Australia

Six month payroll tax waiver for eligible businesses with Australian grouped wages up to $4 million (for the return periods of March 2020 to August 2020).

Businesses with annual Australian grouped wages above $4 million that can demonstrate they have been significantly impacted by COVID-19 will, upon application, be able to defer payroll tax payments for the 6 months from April to September 2020.

Land Tax Deferral

Landowners due to pay 2020 land tax that have at least one non-residential property and total taxable landholdings below $1 million have the option of deferring their 2020 land tax payment until after 30 June 2020.

The State Revenue Office will contact all taxpayers who are eligible for this deferral.

ATO Relief – Tax Payment Deferral Options

Deferring by up to four months the payment date for BAS amounts due (including PAYG instalments), income tax assessments, FBT assessments and excise.

Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to outstanding tax liabilities.

Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans, and

Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.

Instant Asset Write Offs and Accelerated Depreciation

Applicable to assets purchased after the 12 March 2020

An increase in the instant asset write off threshold from $30,000 to $150,000 and expanding access to these write-offs to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.

For assets with a purchase price of more than $150,000 or purchased after 30 June 2020, businesses with aggregated annual turnover of less than $500 million, in addition to the standard depreciation a claim for assets, will be able to deduct 50% of the asset cost in the year of purchase via a time limited 15 month investment incentive through to 30 June 2021.

Liquor Licence Fees

Victoria

Waiving of liquor licensing fees for 2020 for affected venues and small businesses.

Businesses that have paid for a renewable liquor licence for 2020 will be reimbursed their licence fee and this yet to pay will have the fee waived.

The State Revenue Office will administer the reimbursement, regardless if whether the liquor licence fee was paid to it or the Victorian Commission for Gaming and Liquor Regulation.

Tasmania

Provide a 50% discount in liquor licensing fees and waiver of application fees for the entire 2020 calendar year

Superannuation & Social Security for Individuals and Sole Traders

Early release of superannuation

The Government will allow individuals in financial stress to access up to $10,000 of their superannuation in the 2020 financial year and a further $10,000 in the 2021 financial year.

To be eligible for early release of superannuation you must be either have:

Been unemployed, or

Been eligible to receive Jobseeker payment, Youth Allowance for job seekers, Parenting Payment, Special Benefit or Farm Household Allowance, or

Been made redundant on or after 1 January 2020, or

Had your working hours reduced by 20 percent or more, or if you were a sole trader had your business suspended or experienced a reduction in your turnover of 20 percent or more

Those who are eligible are able to apply through the myGov website www.my.gov.au from mid April 2020 to access the funds before 1 July 2020 for the first $10,000 and have three months after this date to access more. These funds will not be taxed and will not affect Centrelink or Veterans’ Affairs payments.

No Relief for Employer Super Obligations

Employers will still need to meet their ongoing super guarantee obligations for their employees.

Income Support For Individuals & Sole Traders

Two $750 stimulus payments to pensioners, social security, veteran and other income support recipients and eligible concession card holders. The first of these payments was announced on 12 March 2020 and the second will be automatically made on 13 July 2020. The payment will be tax-free and will not count as income for social security, farm household allowance, and veteran payments.

From 27 April 2020, the Government is also temporarily expanding eligibility to income support payments to include sole traders and and establishing a new time limited Coronavirus Supplement to be paid at a rate of $550 per fortnight for the next 6 months on top of existing entitlements.

The Coronavirus Supplement will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit and be in addition to the payments made on under these allowances.

The Jobseeker payment is currently $550 per fortnight and the addition of the Coronavirus Supplement increases this payment to $1,100 per fortnight.

Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.

Apprentice Relief

The government has introduced a wage subsidy to support small businesses to retain their apprentices and trainees. Businesses may be eligible to receive 50 per cent of their apprentice’s wages, capping at $21,000, per apprentice, for the nine months from 1 January 2020 to 30 September 2020.

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider. Like other assessments, this is expected to be completed via a SmartForm on the Australian Apprenticeship website.

Employers can register for the subsidy from 31 March 2020, and final claims of payment must be lodged by 31 December 2020.

Staff considerations

The World Health Organisation (WHO) declared Coronavirus (COVID-19) a pandemic on 11 March 2020. With the impact of COVID-19 changing the business landscape daily, it is unsurprising that sole traders have been left asking “but what does this mean for me, my business and workforce?”

Workcover & working from home

An important point to note is where your team are working from home, their home becomes a place of work and is therefore covered by Workcover.

Displaced workers

Working for Victoria Fund

Under the $500 million Working for Victoria Fund, displaced workers will be eligible to apply for different types of work. This presents opportunities for paid work and an opportunity to contribute to Victoria’s ability to manage this event and support the community.

Some displaced workers will have skills that can be readily transferred to new roles. The Government can also assist skills development or help people in obtaining immediate accreditation to commence work.

The Government will work across the public sector, local government, the not-for-profit sector and key private sector employers to facilitate job matching.

For more information visit: www.vic.gov.au/workingforvictoria

Insolvency – Temporary relief for financially distressed businesses

23 March 2020 the Government announced temporary changes on insolvency laws (Corporations Act 2001). These proposed changes are designed to give businesses time to assess their solvency, implement restructuring plans where needed and take advantage of the safe harbour provisions under the Corporations Act 2001.”

Most notable changes are:

A temporary increase in the statutory demand threshold to $20,000;

An increase in the time to comply with a statutory demand from 21 days to 6 months;

A temporary increase in the size of the debt required to issue a creditor’s petition to $20,000;

An increase in the time to comply with a bankruptcy notice from 21 days to 6 months;

The moratorium on action against a debtor following the presentation of a declaration of intent to present a debtor’s petition is increased to 6 months; and

A six-month moratorium on directors’ insolvent trading liability, for debts incurred in the ordinary course of business.

If you are still waiting in your state or territory for the regulations to be released, here are some tips / potential traps to help you to identify issues and opportunities around your businesses lease.

Have the conversation with your landlord now. Asking for a 50% rent reduction for a 2 to 3 month period is not unreasonable. Landlords will want their tenants to have viable businesses on the other side of this pandemic or they face the possibility of empty shops, months with no rental income, paying costs that they would usually pass on to tenants. It is also worth reviewing the terms of the lease to check for any terms that the tenant could use as leverage to swing a rent reduction in their favour.

How could Coronavirus cause a tenant to breach their lease?

Infection disease obligations
Tenants may have reporting obligations if the premises (or its occupants) come in contact with an infectious disease and leases often includes clauses which require tenants to advise landlords in these circumstances. Tenants can also be required to comply with directions given by government authorities; i.e. clean-up measures, at the tenant’s expense. If tenants fail to comply with the directions of their landlord or authorities, they may be in breach of their lease and also liable for costs including the landlord’s losses or damages.

Stopping trading
Most leases require tenants to operate their businesses from the premises during normal business trading hours, with limited exceptions. If a tenant closes a shop without the landlord’s consent during times when it is required to trade, it may be in breach of the lease. Tenants could face losing security deposits, bank guarantees and in some situations, individuals could be personally liable for the tenant’s breach. A nationwide or state-sanctioned lockdown may override a trading obligation, but it would have to be considered on a case-by-case basis.

When would a tenant be entitled to compensation as a result of the Coronavirus?
Tenants have legal rights to compensation in circumstances where landlords interfere with a tenant’s use of the premises and the tenant suffers a loss. A tenant may have a claim against their landlord if the landlord forced the tenant to shut their store. There are exceptions; i.e. if a landlord causes the interference in response to an emergency or at the direction of a government authority.

2. Is there an opportunity to change the terms of a lease?

There’s always an opportunity if discuss it the right way but a crisis can provide opportunities to negotiate terms which can benefit both parties. Whatever the parties decide, the agreement should be documented in writing so there is clarity on what has been agreed and it’s binding. The economic climate is too uncertain to do deals on a handshake, despite how good the relationship might be. The following are examples of renegotiation options:

If the lease is due to expire and the tenant does not have an option to renew the lease, it could agree to renew the lease for a further term (giving the landlord comfort that it will have continuous rent income), subject to the landlord agreeing to a short-term rent abatement.

If a tenant runs a strong-performing business from the premises, it could negotiate a reduced base rent and agree to top it up with turnover rent (a percentage of the tenant’s turnover which exceeds a threshold amount).

If there are still a number of years left in the term, a tenant could agree to carry out refurb works at the premises (preferably at a deferred date), subject to the landlord agreeing to a rent abatement.

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